5 indicted on charges of student-loan fraud

By Mike Carter

Jun. 11, 2008 (McClatchy-Tribune Regional News delivered by Newstex) -- Three members of a Renton family and two Seattle women have been indicted on charges alleging they fraudulently obtained $690,000 in student loans.

Charged in a 22-count indictment were Kathy Hardy, 59, her daughters, Leslie Gordon, 35, and Theresa Hardy, 20, all of Renton; and associates Katherine Fair, 36, and Kimberly Jones, 36, both of Seattle.

The indictment states that they applied for nearly $2.3 million in student loans at several banks since 2005, using other people's stolen identities as either applicants or co-signers. The banks loaned them $690,000, which has never been repaid, said Assistant U.S. Attorney Norm Barbosa.

The investigation was run by the Social Security Administration's Office of Inspector General and alleges that the loans were obtained from a variety of private student-loan organizations, such as Sallie Mae (NYSE:SLM) and My Rich Uncle.

Sometimes the women would apply using their own names, but the Social Security number of someone else with the same name, according to the charges. Other times, they would use stolen identities as either applicants or co-signers, attempting to obtain the largest loan possible, the indictment states.

Barbosa told U.S. District Judge Mary Alice Theiler that a search of Kathy Hardy's home turned up lists of names, birth dates and Social Security numbers apparently from a "health-care setting." Hardy works at a hospital clinic, Barbosa said.

Gordon, Theresa Hardy and Fair all pleaded not guilty to the charges Tuesday before U.S. District Judge Mary Alice Theiler. Gordon and Hardy were placed on supervised release. Fair and Kathy Hardy will appear at detention hearings today, and Hardy will enter her plea at that time, according to proceedings.

Each woman is charged with various counts of bank fraud and aggravated identity theft. The fraud charges carry a prison term of up to 30 years and a possible $1 million fine for each count. Each of the aggravated identity-theft charges carries a two-year mandatory prison term in addition to any other sentence.

Mike Carter: 206-464-3706

Newstex ID: KRTB-0181-25920190